CFTC Turns To Whistleblowers To Combat Crypto Scams

Table of Contents

• Significant Rewards For Crypto Whistleblowers
• Whistleblowers Are Vital: CFTC Commissioner
• Growing Impact on CFTC Jurisdiction
• Crypto Exploits on the Rise

The US Commodities and Futures Trading Commission has reported that it paid a total of $16 million to whistleblowers who played a pivotal role in uncovering fraudulent activities, primarily in the crypto space.

Significant Rewards For Crypto Whistleblowers

In an announcement made on October 31, CFTC commissioner Christy Goldsmith Romero highlighted the critical role of whistleblowers in the fight against crypto scams and reaffirmed the agency's commitment to the whistleblower program. According to the CFTC's statement, a significant portion of these funds, amounting to nearly $15 million, was awarded to two individuals who provided crucial tips that helped the regulator successfully prosecute several cases related to crypto fraud. 

The report disclosed that the CFTC has awarded a total of $350 million to whistleblowers, with over $3 billion spent on enforcement sanctions. This substantial sum underlines the CFTC's unwavering commitment to encouraging individuals to come forward with information regarding fraudulent activities, particularly in the crypto sector.

Whistleblowers Are Vital: CFTC Commissioner

Romero emphasized the importance of these informants, stating that without their assistance, the CFTC would not be able to "fully protect" customers and maintain the integrity of the markets. She also acknowledged the efforts of the CFTC's Office of Customer Education and Outreach, which educates the public on identifying, avoiding, and reporting cryptocurrency fraud.

Romero noted, 

"With the rise of crypto, more retail customers have come under the CFTC's jurisdiction... Whistleblowers help identify fraud and other illegality, interpret key evidence, and save considerable Commission resources and time. The faster we can stop fraud, the more we can protect customers from harm."

Growing Impact on CFTC Jurisdiction

The CFTC's statement also highlighted the increasing adoption of cryptocurrencies in the United States, prompting the regulatory body to intensify its vigilance over entities and individuals involved in digital asset transactions. 

Romero stressed, 

"With the rise of crypto, more retail customers have come under the CFTC's jurisdiction, making even more critical the efforts of the CFTC's Whistleblower Program and the Office of Customer Education and Outreach."

In April, Romero emphasized the need to manage the risks associated with cryptocurrency to safeguard market integrity, national security, and financial stability. She advocated for the integration of more robust identity verification measures, which would help minimize illicit financial activities within the cryptocurrency market.

Crypto Exploits on the Rise

Meanwhile, the report indicated that in the second quarter of 2023, the number of crypto-related exploits increased by 65.3% compared to the same period the previous year. Despite the rise in incidents from 49 to 81, losses decreased by 60.4% compared to the second quarter of 2022.

Highlighting the CFTC's effective actions against crypto-related fraud, it was noted that the agency secured a record penalty payment of $3.4 billion in a Bitcoin-related fraud case in April. Additionally, in July, the CFTC prevailed in its case against Digitex CEO Adam Todd, who was ordered to pay $16 million in penalties.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.